Enterprise Resource Planning (ERP) Solutions: To Customize or To Build From Scratch?

30 May 2017

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Prepackaged Enterprise Resource Planning (ERP) solutions are a popular choice among many IT managers and business executives. For some, it will also work out to be an ideal solution to manage all aspects of their business, but for others, it can turn out to be a costly headache.

The idea behind ERP systems is that a suite of software tools can be utilized to rapidly integrate all areas of business administration. Over the years, Oracle and SAP have dominated this space by offering integrated tools for various businesses.

While it’s true that these turnkey ERP solutions do offer some advantages, it can also be beneficial to build a customized ERP application in-house / with a trusted partner.

The primary advantage of choosing a custom ERP solution is the fact that it will be developed specifically for the requirements of your organization. As a result, you won’t have to make any changes to your operations to fit the solution. But you have to determine if the flexibility it provides is worth the cost.

At the same time, the cost of customizing a vendor solution can be extremely high, so a customized solution can turn out to be quite a cost-effective option in the long run.

Whether it’s customized or packaged for a commercial ERP system, how long will it take to realistically take to build from scratch?

ERP Solutions Take a Long Time to Reach the End-User

For the most part, common commercial ERP packages for mid-sized businesses have over a decade of development work completed by a software development team of approximately hundred developers.

But it’s all relative to the industry, complexity, and the development stage. If it’s a small mom-and-pop operation, you can of course scale it back and get it done much faster.

But for an ERP solution to offer enough features and flexibility across various departments, this can be an enormous undertaking. Even if the ERP system is up and running, it will be an ongoing effort to evolve with the business as it grows (which is also another advantage of using a customized ERP solution).

Furthermore, as it’s a B2B system, it has to be available (almost) all the time. This, in turn, can make the room for error significantly small.

It’s important to note that a lot of medium to large businesses don’t use 60% to 70% of their ERP system.

If that’s the case for your particular business, there can also be some wiggle room to respond to errors as they pop up.

After weighing all the pros and cons, a lot of IT managers choose to go with a packaged solution and try to adapt their business processes to the ERP system. This is mainly driven by lack of capital, time, and the necessary resources to develop an ERP system that perfectly suits their business.

Most of these companies try to create a one-size-fits-all kind of ERP offering and a lot of them fail. There are just too many of these packaged ERP solutions out there and these often become unsuitable when businesses try to modify them to better fit their own needs.

According to Sam Graham, independent ERP consultant, "Systems in that market [ERP] typically take about 300 man years to reach maturity. In terms of lines of code, the accounting modules typically account (no pun intended) for about 15% of an ERP system (the rest being everything from sales to manufacturing). So I would start with investing, say, 5 man-years in a basic accounting system then, with the income from that, develop it into something that can challenge the likes of Coda and Sage accounting systems. Then get investment to add the other 85% to challenge the Tier 2 ERP systems like Sage X3, Infor".

When it comes to ERP software development, what matters is the type of modules you're looking to build. The average resource management module takes up to 6 months to develop and 2 years to refine.

ERP Implementation Times are Relative to the Business

Once you get passed the development cycle, you also have to deal with the implementation stage. Again, the time it takes to implement an ERP solution is relative to the business.

If it’s an on-site solution, it will take a lot longer to complete. This is because it will take some time to get through the acquisition process and set it up on all the company servers and computers.

A cloud-based ERP offering will be a lot faster because the system will run on the cloud and can be accessed by nearly any internet-connected device. While this can be a convenient method for everyone involved, it can also bring up some privacy and security concerns.

If you think of ERP as a way to model your business at the enterprise level, note that the more changes happen in regulatory, market conditions, supply chain, the more changes will have to be made to your system or its separate modules.

As Chuck Matthews, a quality engineer with 35 years in IT, puts it: "Development of ERP will never end. Each cycle will take 10 to 15 years, and you will be ready for the next cycle. ERP development has proven to be an iterative process."

How long did it take your company to develop a robust ERP system? How big was the development team? What were the problems you faced during the development cycle? Please share your thoughts and experience in the Comments section below.

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Andrew is our IT storyteller and copywriter. His current undertaking is big data analytics and CSS as well as digital design and branding.
He is a contributor to various publications with a focus on new technology and marketing.

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